CONSISTENTLY DELIVERS

Jul 18, 2014

NCGA Week in Review - July 18, 2014

MEDICAID

State lawmakers worked rigorously this week to in an attempt to tackle the state’s Medicaid problems. The legislature is trying to reform the state’s Medicaid program so that there will be better cost predictability. The $13 billion program that covers about 1.7 million North Carolinians has run over budget the past four years.

Despite heavy opposition from the House, Governor and a large portion of the medical community, the Senate’s Medicaid proposal overcame a hurdle on the floor Thursday. A Senate committee recommended a version of the HB 1181, NC Medicaid Modernization, which would shift Medicaid to a managed-care model. The proposal calls for provider-led and commercial managed care organizations to compete for enrollees within designated regions, with the provider-led plans being responsible for their cost overruns by 2018.

The Senate plan also calls for the creation of a new department, the Department of Medical Benefits. Under this plan, the DMB would be in charge of operating the state’s Medicaid and NC Health Choice programs. Also, instead of an appointed Secretary to head the Department, a Board would be established, consisting of seven members all appointed by the Governor and General Assembly.

The House has embraced the Accountable Care Organizations model, which would reward doctors and hospitals in the provider-run networks for meeting patient health goals while saving money The House’s timeline is also less aggressive than the Senate’s timeline, requiring providers to take all risk for overruns by 2020, rather than 2018.

The House plan is backed by the state’s major health care providers, including hospitals and doctors. Governor McCrory also champions this proposal. In fact, the Governor showed opposition to the other chamber’s proposal, stating “The Senate’s proposed bureaucratic reorganization is impractical and undermines the progress that has been made during the past year and a half. This legislative overreach also raises some serious constitutional issues and should not be raised in the closing days of the short session.”

Senator Ralph Hise, R-Mitchell and Representative Nelson Dollar, R-Wake, have suggested there may be room for compromise. The two legislators, who are both primary sponsors of their respective chamber’s version of the legislation, said they hope to strike a deal before the session ends that will give legislators some certainty on the cost of Medicaid. “These are issues that can be reasonably bridged,” said Dollar.

ECONOMIC DEVELOPMENT LEGISLATION

The Senate Finance committee passed a revised version of HB 1224, Local Sales Tax for Education/Economic Development Changes, which prevents counties from raising sales taxes to pay for both public education and public transportation. The legislation says that counties can raise taxes specifically for transit or for education, but not for both. It caps local sales tax rates at 2.5 cents per dollar. Though it spells out the amount eligible for use on education and transit, the bill allows for more flexibility on how to use sales tax revenue overall.

The bill has stirred the most controversy in Mecklenburg County, where it already levies 2.5 cents for nearly every dollar spent in the county. Coupled with the state’s levy of 7.75 vents, the county has one of the highest sales taxes in the state. A current referendum that would push the county’s tax to 2.75 cents would effectively become null by the legislation. The legislation also appears to be directed at Wake County, where the commissioners plan to vote August 4th on putting a referendum on the November ballot that would raise sales taxes by a quarter cent for education spending.

The bill also creates a new state fund to attract jobs, the Job Catalyst Fund. The purpose of the Job Catalyst Fund will be to provide funds to a local government for projects that result in the creation of jobs. Businesses who receive these funds must agree to create and maintain a specific amount of jobs, depending on the county’s tier, for a minimum of 10 years.

Although HB 1224 already passed the Senate Finance committee this week, it was re-referred back to committee. The bill also still needs full House and Senate approval, along with the Governor’s signature, before the end of short session in order to become law.

CROWDFUNDING & NEW MARKETS

HB 680 , Start-Ups Act/New Markets Tax Credit Act, passed the Senate Commerce committee on Wednesday. The legislation allows NC residents to invest small amounts in new in-state ventures through crowdfunding. It paves the way for companies to raise up to $1million in capital, and $2 million if they have undergone a financial audit, through “unregistered securities.” These companies would have the ability to sell shares, mainly online, directly to small investors, rather than through the stock market. The bill caps each investor’s purchase to $2,000 in “unregistered securities” unless that person in an “accredited investor.” Accredited investor implies a level of financial savvy and stability of funds to have enough money to risk.

At the federal level, Congress has passed a federal crowdfunding law that would ordinarily govern these types of transactions, but the responsible agency has yet to adopt rules necessary to put the law in place. At the state level, the Secretary of State’s Office would oversee the transactions and collect quarterly reports.

The second half of the bill focuses on the New Markets Tax Credit, which bill sponsor, Sen. Rick Gunn, R-Alamance, said would help entice $208.3 million in investments to the state. Currently the state levies a gross premiums tax on insurance companies for the privilege of doing business in NC. This bill would give those insurers a tax credit in exchange for investing in qualified small businesses that may not be able to find capital otherwise.

Language in the bill requires that 75 percent of the money raised would have to go to the most economically distressed counties. While similar to the federal new markets credit, the state proposed language does not rely on the federal measure.

The bill passed committee with strong bi-partisan support this week, and now sits in Senate Finance for consideration.

COMMON CORE

A compromise on the highly debated Common Core education standards has occurred. The bill, SB 812, Replace CCSS w/NC’s Higher Academic Standards, passed the House on Wednesday 71-34. Governor Pat McCrory pledged that he would sign the bill, stating that it “initiate[s] a much-needed, comprehensive and thorough review of the standards. No standards will change without the approval of the State Board of Education.”

The legislation creates a commission to rework the state’s math and language arts requirements. SB 812 now sits on the Governor’s desk, awaiting signature.

BUDGET NEGOTIATION

The Senate announced a new proposal Tuesday that marked the first major move in about a week toward reaching a final revised $21 billion state budget. Republican Senators proposed a compromise for teacher raises, giving them an 8 percent rather than 11 percent raise. This moves the number closer to the House’s proposed 6 percent raise. Senators also proposed to cut fewer elderly people from Medicaid, also mobbing this contentious item closer to House preferences. “The Senate has tried to make a leap and come to a compromise” said Sen. Harry Brown, R-Onslow, chief negotiator.

House budget writers have not accepted the proposal. Budget negotiations for the FY 2014-15 will continue into the upcoming week.

POET LAUREATE CONTROVERSY

Last Friday, Governor Pat McCrory appointed Valerie Macon of Fuquay-Varina to serve a two year term as poet laureate. Valerie Macon is a disability examiner for the state and is self-published with two books of poetry. She is also known for her dedication to helping the homeless. McCrory has been criticized by the poetry community for bypassing the traditional process of having North Carolina Arts Council set up a committee of writers to review applications and recommend poets. The Governor, however, is not bound by law to consult with the NC Arts Council on the appointment of the poet laureate. He has promised to review the process he used to name the new poet laureate but said Wednesday he also wants to provide opportunities to people who aren’t part of elite groups.

On Thursday, after serving less than one week as the state’s poet laureate, Macon resigned. She released a statement explaining that she does not want the “negative attention that her appointment has generated to discourage or distract attention from the Office of the Poet Laureate.”

After her resignation, McCrory released a statement expressing his disappointment with “the way some in the poetry community have expressed such hostility and condescension toward an individual who has great passion for poetry and our state.”